Missed RMD
New client came in, first RMD year was 2007, he took distributions in 2007 and 2008 and missed 2010. How should we proceed now? Thanks
New client came in, first RMD year was 2007, he took distributions in 2007 and 2008 and missed 2010. How should we proceed now? Thanks
Permalink Submitted by Alan Spross on Tue, 2011-11-29 20:23
Since 2009 RMDs were waived, at this point 2010 is the only delinquent year. Client should immediately remove his 2010 RMD and file a stand alone Form 5329 for 2010 asking the IRS to waive the penalty for reasonable cause (see Form 5329 Inst, p 6). Include a copy of the statement showing the distribution and use the best valid excuse there is. Perhaps client can say that they were confused by the 2009 RMD waiver and did not realize that RMDs had to start again last year. Good chance the IRS will waive the penalty.
Then client should take the 2011 RMD before the end of 2011. Both the 2010 and 2011 RMDs will be taxable in 2011.
Permalink Submitted by scott g on Tue, 2011-12-20 21:30
should you submit the penalty when submitting the request for reasonable cause?
Permalink Submitted by Alan Spross on Tue, 2011-12-20 21:44
No. Just the completed 5329 with explanation of reason for the waiver request.